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Denver drops credit card fees, sees surge in plastic payments

By Jon MurrayThe Denver Post

Posted:
03/26/2014 05:49:42 PM MDT

Updated:
03/27/2014 08:28:30 AM MDT

Although the city of Denver has waived credit card fees, convenience fees remain for credit payments of motor vehicle registration fees, which Denver and other counties collect using a system run by the Colorado Department of Motor Vehicles. (Helen H. Richardson, The Denver Post file)

Denverites hate credit card fees.

That conclusion — drawn from the first two months of a city experiment that has waived convenience fees for most plastic payments — might seem obvious.

City officials thought so, but even they were surprised by how much the pesky fees apparently had been leading people to pay by cash or check instead.

Without the fees, credit card payments surged.

In some categories, credit card receipts in January and February increased tenfold or more from the same period in 2013, according to city data.

Receipts for property taxes paid online with credit cards shot up from $892,000 to $17.6 million — or 20 times as much. At the counter, card payments for property taxes increased by 18 percent, to $37.1 million.

Overall, the city's credit receipts in the first two months of the year — $68.4 million — were up 48 percent.

The city on Jan. 1 waived the standard 2.5 percent convenience fee on credit and debit cards for property and excise taxes, plus court fees. (In-person debit card transactions had cost a flat $3.) An online vendor waived the fee for photo-enforcement traffic fines Feb. 1, and traffic tickets followed March 1.

Convenience fees remain for credit payments of motor vehicle registration fees, which Denver and other counties collect using a system run by the Colorado Department of Motor Vehicles.

"What we've learned is that any convenience fee turns people off," said David Edinger, the city's chief performance officer.

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Most metro cities and similar-sized cities surveyed by Denver don't charge fees. But among some that do, officials say, Denver's experience has piqued interest.

Edinger credited the idea to chief financial officer Cary Kennedy, also the deputy mayor. Mayor Michael Hancock signed off on it.

Although cash and check payments carried no convenience fees, they actually cost more for the city to handle than credit card payments, Edinger said.

So, while the city still must pay merchant fees for card payments, Edinger says, by eating those and other processing costs, it will save money in the long run if more people pay by card. And wait times to pay in person will decrease.

The city budgeted $945,000 this year to offset the loss of fees.

But $513,000 was gone by the end of February — a sign of success, officials say, that nonetheless could require budget revisions in coming months.

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